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Take Actions to De-risk

In: Dynamic Decisions Energy PIVOT, Adaptive Moves, Winning BOUnCE

Author

Listed:
  • Ricardo G Barcelona
  • Franz Heukamp

Abstract

De-risking energy investments imply two complementary facets: Avoiding losses from adverse events or profiting from better-than-expected outcomes. This managerial mindset reframes risk management. Under volatile markets, managerial flexibility is valued when prior commitments can be reversed affordably to avoid losses or to appropriate surplus. By employing value chain risk assessment, managers could have a granular and comprehensive view of specified risks and their underlying causes. As a result, risk-taking confers on managers the ability to structure specific commitments as creating options by adaptively managing their strategic and operational moves. Policy’s role is likewise reframed as one that facilitates capital flows as opposed to one that guarantees private payoffs.

Suggested Citation

  • Ricardo G Barcelona & Franz Heukamp, 2022. "Take Actions to De-risk," World Scientific Book Chapters, in: Dynamic Decisions Energy PIVOT, Adaptive Moves, Winning BOUnCE, chapter 6, pages 295-355, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9781800611979_0006
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    More about this item

    Keywords

    Energy; Energy Investments; Option Games; Real Options; Climate Finance; Sustainable Investment; Dynamic Decisions; Decision Uncertainties; Renewable Energy; Fossil Fuel; Carbon Tax; Energy Transition; Behavioural Economics; Political Economy; Financial Economics; Strategy and Competition;
    All these keywords.

    JEL classification:

    • Q5 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Environmental Economics
    • O13 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Agriculture; Natural Resources; Environment; Other Primary Products
    • P48 - Political Economy and Comparative Economic Systems - - Other Economic Systems - - - Legal Institutions; Property Rights; Natural Resources; Energy; Environment; Regional Studies
    • Q43 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Energy - - - Energy and the Macroeconomy
    • G3 - Financial Economics - - Corporate Finance and Governance
    • G30 - Financial Economics - - Corporate Finance and Governance - - - General
    • C58 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Financial Econometrics

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